Winter 2016
By Amy Costello, P.E., LEED-AP O+M, sustainability manager, Armstrong Flooring
Circular economy and systems thinking are trending sustainability concepts, but these concepts are not new. John Muir observed more than 100 years ago: “When we try to pick out anything by itself, we find it hitched to everything else in the universe.” As an ecology student, I was taught about the connectivity of natural systems — photosynthesis, food web and the like — but systems are not limited to nature. They extend, as Muir points out, to everything.
Industrial ecologists examine material and energy flows through industrial systems, while economists study production, resource allocation and distribution of goods and services through economic systems. What is interesting is all three are essentially studying the same thing from different lenses.
With the rebirth of life cycle thinking and especially with the inclusion of the life cycle assessment (LCA) in green building rating systems such as LEED v4 and Green Globes, the building community is starting to realize the importance of the connection between building systems, industrial systems and ecological systems. Sustainability impacts — social, environmental and economic — occur at each phase in a product and building’s life cycle, and trying to navigate and prioritize these impacts can be a challenge.
Many tools have been developed to bring transparency and clarity to these issues. LCA is a tool for understanding environmental impacts of a product or building; however, an LCA will not provide the whole picture as it does not address social or economic issues.
Life Cycle Cost Analysis (LCCA) can assess the economic issues in terms of total cost of ownership for a product or building. It provides a standardized assessment approach that takes into account all the economic impacts for consideration. The end result is a robust economic comparison of alternatives over time, and an improved understanding of how periodic costs impact the total cost of ownership.
However, there are factors that impact LCCA; for example, a difference in product, the application of the product (traffic, etc.) and maintenance practices will all have an affect on the overall health of the environment and budget. To best analyze your life cycle choices, I recommend following the guidelines identified by Stanford University Land and Buildings:
- Establish clear objectives for analysis. Since LCCA is an economic analysis tool useful for the comparison of life cycle costs for product alternatives, a typical objective is to determine which alternative has the lowest cost of ownership.
- Determine the criteria for evaluating alternative products. It is important for a company to discuss and document the primary metrics and variables that will be used for their decision making. Normally this would include payback thresholds, internal return rates (i.e. discount rate) and expected performance criteria (i.e. life expectancy, usage levels, etc.).
- Identify base case and develop alternatives. Typically a maximum of five alternatives is sufficient to provide enough information to make a decision. In all cases the alternatives being compared need to fulfill the same basic functional requirements.
- Gather cost information. For each alternative, gather and document all relevant costs associated with ownership for the assessment period. Costs that are incurred equally for each alternative (i.e. product cost) can be ignored to simplify the calculation process.
- Calculate the life cycle costs for each alternative. Analyze the alternatives by calculating the net present value of each, then compare the results using the previously defined evaluation criteria. For products with similar economic performance, a second set of criteria, such as environmental impact, may be used to make the final decision.
The practice of going through a Life Cycle Cost Analysis can be, admittedly, overwhelming at first blush. However, LCCA is most effective when used early in the design phase of a project as it enables decisions — based on the long-term economic analysis and not simply the first cost. A worksheet to help you calculate life cycle cost can be found at armstrongflooring.com.
The challenge moving forward will be how to value and compare the costs associated with the different systems. The financial costs associated with economic systems are relatively easy to calculate and compare, while the costs associated with environmental and social system are more difficult because they involve personal judgment. Regardless, being aware of systems and life cycle thinking will lead to better choices and outcomes with a more sustainable future.
